Supreme Court: The bench of V Ramasubramanian* and JB Pardiwala, JJ has dismissed the writ petition filed by journalist Rana Ayyub in a money laundering case, after observing that the issue of territorial jurisdiction cannot be decided in a writ petition, especially when there is a serious factual dispute about the place/places of commission of the offence. The Court gave her the liberty to raise the said question before the Special Court as the answer to the same would depend upon evidence as to the places where any one or more of the processes or activities mentioned in Section 3 of the Prevention of Money-laundering Act, 2002 (PMLA) were carried out.
The Court, however, held that it is the Special Court constituted under the PMLA that would have jurisdiction to try even the scheduled offence. This observation came while answering the question as to whether the trial of the offence of money-laundering should follow the trial of the scheduled/predicate offence or vice versa.
Background
During the pandemic, Ayyub had initiated crowdfunding campaign through an online crowdfunding platform named “Ketto” and ran three campaigns from April 2020 to September 2021.
In connection with the same, the Mumbai Zonal Office of the Enforcement Directorate initiated an enquiry against her under the Foreign Exchange Management Act, 1999 through an Office Order dated 3.8.2021.
An FIR was lodged against her under Sections 403, 406, 418 and 420 IPC read with Section 66-D of the Information Technology (Amendment) Act, 2008 and Section 4 of the Black Money Act.
After she submitted a detailed response as ordered by the Mumbai Zonal Office of the Enforcement Directorate, the Delhi Zone-II Office of the Directorate of Enforcement registered a complaint in the Court of the Special Judge at Ghaziabad on the ground that the FIR registered on 7.9.2021 on the file of the Indirapuram Police Station, Ghaziabad formed the basis for the complaint of the Enforcement Directorate.
She was not only summoned to the Delhi Zone-II Office but a provisional order of attachment of her bank account in a Navi Mumbai HDFC Bank Branch was also.
A Look out Circular was issued against the petitioner, but the same was set aside by the High Court of Delhi in a writ petition filed by the petitioner.
In a second writ petition filed by the petitioner, the High Court of Delhi restrained the Directorate of Enforcement from taking further steps under Section 8 of the PMLA on the short ground that the validity period of 180 days, of the order of provisional attachment, came to an end statutorily on 4.8.2022.
Thereafter, the Court of the Special Judge, Anti-Corruption, CBI Court, Ghaziabad, passed also summoned Ayyub. This led to the writ petition before the Supreme Court questioning the territorial jurisdiction of the Ghaziabad Court.
Contentions
It was Rana Ayyub’s case that under Section 44(1) of the PMLA, an offence punishable under the Act, shall be triable only by the Special Court constituted for the area in which the offence has been committed and hence, the Special Court in Maharashtra alone could have taken cognizance of the complaint.
She argued that no part of the alleged offence of money-laundering was committed within the jurisdiction of the Special Court, Ghaziabad and that her bank account where the alleged proceeds of crime were deposited, is located in Navi Mumbai, Maharashtra. Therefore, the lodging of the complaint at Ghaziabad was an abuse of the process of the court and was done at the instance of the founder of the Hindu IT Cell.
In response, the Directorate of Enforcement contended that under the scheme of the Act, the complaint of money-laundering should follow the complaint in respect of the scheduled offence. Since the complaint was registered in Indirapuram Police Station, Ghaziabad, it necessarily had to lodge the Enforcement Case Information Report (ECIR) on the file of the same court, within whose jurisdiction the scheduled offence became triable. Further, Ayyub was alleged to have received money through an online crowdfunding platform and that there were several victims within the territorial jurisdiction of the Court of the Special Judge who had contributed money. Hence, a part of the cause of action had actually arisen within the jurisdiction of the Court of the Special Judge, Ghaziabad.
Analysis
Trial of the offence of money-laundering should follow the trial of the scheduled/predicate offence or vice versa
The Court dealt with the relevant provisions of the PMLA at length and noticed that PMLA provides for a two-pronged approach, one for dealing with the proceeds of crime and the other for dealing with the person guilty of the offence of money-laundering. While Chapter III and Chapter VI prescribe the procedure for dealing with the proceeds of crime, through a process of attachment, confirmation through adjudication and an appellate remedy to the Special Tribunal, Chapter VII deals with the prosecution of the money launderers by Special Courts.
A Special Court is constituted under Section 43(1) primarily for the purpose of trying an offence punishable under Section 4. But sub-section (2) of Section 43 confers an additional jurisdiction upon such a Special Court to try any other offence with which the accused may be charged at the same trial.
Further, Section 44(1)(a) lays down the most fundamental rule relating to territorial jurisdiction, by providing that an offence punishable under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence has been committed. By prescribing that an offence punishable under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which “the offence” has been committed, Section 44(1)(a) makes it crystal clear that it is the Special Court constituted under Section 43(1), which will be empowered to try even the scheduled offence connected to the same.
However, as per Section 44(1)(c), if the Court which has taken cognizance of the scheduled offence is different from the Special Court which has taken cognizance of the offence of money-laundering, then the authority authorised to file a complaint under PMLA should make an application to the Court which has taken cognizance of the scheduled offence. On the application so filed, the Court which has taken cognizance of the scheduled offence, should commit the case relating to the scheduled offence to the Special Court which has taken cognizance of the complaint of money laundering.
Taking all the provisions into consideration, the Court held that the trial of the scheduled offence, insofar as the question of territorial jurisdiction is concerned, should follow the trial of the offence of money-laundering and not vice versa.
The Court noted that a careful dissection of clauses (a) and (c) of sub-section (1) of Section 44 shows that they confer primacy upon the Special Court constituted under Section 43(1) of the PMLA. These two clauses contain two Rules, namely,
(i) that the offence punishable under the PMLA as well as a scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence of money-laundering has been committed; and
(ii) that if cognizance has been taken by one Court, in respect of the scheduled offence and cognizance has been taken in respect of the offence of money-laundering by the Special Court, the Court trying the scheduled offence shall commit it to the Special Court trying the offence of money laundering.
The Court also made clear that the provisions of the CrPC are applicable to all proceedings under the Act including proceedings before the Special Court, except to the extent they are specifically excluded. Hence, Section 71 of the PMLA providing an overriding effect, has to be construed in tune with Section 46(1) and Section 65.
The Court also observed that under Sections 177 to 184 of the Cr.P.C almost all contingencies that are likely to arise have been carefully thought out and laid down in these provisions, however, the only contingency that could not have been provided in the above provisions of the Cr.P.C, is perhaps where the offence of money-laundering is committed.
“This is why Section 44(1) begins with a non-obstante clause. The whole picture is thus complete with a combined reading of Section 44 of the PMLA and the provisions of Sections 177 to 184 of the Cr.P.C. 36. Once this combined scheme is understood, it will be clear that in view of the specific mandate of clauses (a) and (c) of subsection (1) of Section 44, it is the Special Court constituted under the PMLA that would have jurisdiction to try even the scheduled offence.”
Hence, even if the scheduled offence is taken cognizance of by any other Court, that Court shall commit the same, on an application by the concerned authority, to the Special Court which has taken cognizance of the offence of money-laundering.
Territorial Jurisdiction of Special Court
The involvement of a person in any one or more of certain processes or activities connected with the proceeds of crime, constitutes the offence of money laundering. A person may (i) acquire proceeds of crime in one place, (ii) keep the same in his possession in another place, (iii) conceal the same in a third place, and (iv) use the same in a fourth place. The area in which each one of these places is located, will be the area in which the offence of money laundering has been committed. To put it differently, the area in which the place of acquisition of the proceeds of crime is located or the place of keeping it in possession is located or the place in which it is concealed is located or the place in which it is used is located, will be the area in which the offence has been committed.
In addition, the definition of the words “proceeds of crime” focuses on “deriving or obtaining a property” as a result of criminal activity relating to a scheduled offence. Therefore, the area in which the property is derived or obtained or even held or concealed, will be the area in which the offence of money laundering is committed.
Special Court of Ghaziabad’s territorial jurisdiction in the case at hand
While it was contended by Ayyub that her bank account is in Navi Mumbai, Maharashtra and that therefore the offence of money laundering, even according to the respondent has been committed in Maharashtra. However, the said contention overlooks the six different types of processes or activities mentioned in Explanation (i) under Section 3 of the Act, as connected with proceeds of crime, namely, concealment, possession, acquisition, or use, etc.
Since the three campaigns were run through an online crowdfunding platform named “Ketto”, (i) the number of persons who provided funds; and (ii) the places where the donors were located; was not clear. Navi Mumbai, Maharashtra is a place where only one of the six different processes or activities listed in Section 3 has been carried out.
Hence, the question of territorial jurisdiction in this case requires an enquiry into a question of fact as to the place where the alleged proceeds of crime were (i) concealed; or (ii) possessed; or (iii) acquired; or (iv) used; and this question of fact will actually depend upon the evidence that unfolds before the Trial Court.
The Court, hence, dismissed the petition and gave Rana Ayyub the liberty to raise the issue of territorial jurisdiction before the Trial Court.
[Rana Ayyub v. Direcotorate of Enforcement, 2023 SCC OnLine SC 109, decided on 07.02.2023]
*Judgment authored by: Justice V Ramasubramanian.
Advocates who appeared in this case :
For Petitioner: Advocate Vrinda Grover;
For Respondent: Solicitor General of India Tushar Mehta;
Rana Ayyub’s Image Courtesy: Medianama